The "strategic financial plan" is the long-term road map for implementing the district’s instructional priorities. A "plan of action" describes how the strategic financial plan will be translated into coherent actionable steps.
Best Practices in School Budgeting
A. Develop a strategic financial plan. A strategic financial plan provides a three to five year perspective on how the district will pursue its instructional priorities and how success will be determined.
B. Develop a plan of action. Roles and responsibilities for implementing the strategic financial plan should be made clear for greater accountability.
C. Allocate resources to individual school sites. Resources have the most direct impact at school sites and should be allocated transparently and consistent with the district’s overall strategy.
D. Develop a budget presentation. A budget document needs to be well organized and also clearly lay out the challenges the district is facing and how the district’s strategies and financial plan will address these challenges.
GFOA Best Practices
- Long-Term Financial Planning. GFOA recommends that all governments regularly engage in long-term financial planning.
- Financial Forecasting in the Budget Preparation Process. GFOA recommends that governments at all levels forecast major revenues and expenditures. The forecast should extend several years into the future. The forecast, along with its underlying assumptions and methodology, should be clearly stated and made available to stakeholders in the budget process. It also should be concisely presented in the final budget document. The forecast should be regularly monitored and periodically updated.
- Basis of Accounting versus the Budgetary Basis. GFOA recommends that the budget document clearly define the basis of accounting used for budgetary purposes. If the budgetary basis of accounting and the GAAP basis of accounting are the same, this fact should be clearly stated. If the budgetary basis of accounting and the GAAP basis of accounting are different, major differences and similarities between the two bases of accounting should be noted. Disparities may include basis differences, timing differences, fund structure differences, and entity differences. The description of the differences between the GAAP basis of accounting and the budgetary basis of accounting should be written in a manner that is clearly understandable to those without expertise in either accounting or budgeting. The use of technical accounting terms should be avoided whenever possible. In cases where the use of technical accounting terms cannot be avoided, those terms should be clearly defined and fully explained.
- The Impact of Capital Projects on the Operating Budget. GFOA recommends that governments discuss and quantify the operating impact of capital projects in the budget document. The impacts should be identified on an individual project basis, but may be summarized.
- Sustainable Funding Practices for Defined Benefit Pensions and Other Postemployment Benefits (OPEB). GFOA recommends that state, provincial, and local government officials ensure that the costs of DB pensions and OPEB are properly measured and reported. Sustainability requires governments that sponsor or participate in DB pension plans, or that offer OPEB, to contribute the full amount of their actuarially determined contribution (ADC) each year. Failing to fund the ADC during recessionary periods impairs investment returns by providing inadequate funds to invest when stock prices are low. As a result, long-term investment performance will suffer and ultimately require higher contributions.
- Making the Budget Document Easier to Understand. GFOA recommends that governments incorporate the features to facilitate broader consumption and greater comprehension of the budget document.
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